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Call for Evidence

Accelerating the transition from fossil fuels and securing energy supplies

The Environmental Audit Committee (EAC) is to launch a new inquiry examining the Government’s policies for securing energy supplies and accelerating the transition from fossil fuels.

Background

The UK remains dependent on fossil fuels for over three-quarters of its energy mix: fossil fuels are still used to generate electricity, heat the majority of homes and fuel vehicles. The surge in oil and gas prices following the Putin regime’s invasion of Ukraine is set to deliver a sharp rise in costs for heating, power and transport for industry and consumers. High fossil energy prices are likely to drive inflation and will affect lower income households disproportionately.

Energy supply and compatibility with net zero 

Since the invasion, the Prime Minister has said that the country needs to do more to ensure its energy security. He has also suggested that there will be a “transitional” increase in domestic hydrocarbon production.[1] The Government plans to issue an energy security strategy to address energy security concerns. This is expected to include measures to accelerate the transition to net zero emissions. The Government’s North Sea Transition Deal, published in March 2021, did not rule out new oil and gas licences, and instead proposed a “Climate Compatibility Checkpoint” before future licensing rounds for oil and gas extraction.

Support for oil and gas

The UK has a number of international commitments on sustainable energy and fossil fuels: 

  • In 2016 the G7 pledged to end most fossil fuel subsidies by 2025.
  • United Nations Sustainable Development Goal (SDG) 7 commits the UK to ensure access to affordable, reliable, and sustainable energy for all.
  • UNSDG 12 commits the UK phasing out harmful subsidies, where they exist, to reflect their environmental impacts.
  • COP26 committed the UK to "phasing down" inefficient fossil fuel subsidies.[2]

The UK has made progress in reducing some subsidies for fossil fuel production, and has phased out coal from electricity generation. Nevertheless, the UK continues to support the production and consumption of oil and gas domestically with a number of tax measures – including a ring-fenced corporate income tax relief related to North Sea extraction activities.

Parliamentary scrutiny of the role of fossil fuels in the UK energy mix

EAC’s inquiry will examine the transitional role of oil and gas exploration and development on the UK continental shelf, including imports; and whether this can be achieved while phasing out fossil fuel use and subsidies in line with the commitments made at COP26 in Glasgow to limit temperature increases to 1.5c. The Committee will examine measures to reduce the UK’s dependence on fossil fuels to protect households from high energy prices and fuel poverty.

The inquiry will complement forthcoming scrutiny work to be carried out by the Business Energy and Industrial Strategy (BEIS) committee on the UK’s 2035 power sector targets and the Government’s Energy Security Strategy, which will examine the future electricity mix.

The two committees will collaborate on these inquiries.

Terms of reference

The Committee invites written submissions of no more than 3000 words, addressing any or all of the issues raised in the following terms of reference, by Friday 6 May 2022:

Securing sustainable energy supplies and protecting households from high prices

  • How effective will the Government’s Energy Security Strategy be: at reducing reliance on oil and gas at the pace required to limit global heating to 1.5 degrees; securing alternative energy supplies; and protecting households from high fossil fuel prices?
  • Should Government policies on onshore energy generation or exploration be revised in light of the energy security situation? Given the current and potential speed of deployment, what low-carbon energy sources are most likely to secure supplies of affordable and sustainable energy rapidly?
  • Is the Government doing enough to protect the high number of households likely to fall into fuel poverty as a result of high fossil fuel prices over the coming year? To what extent, and how rapidly, could energy saving or efficiency measures help to reduce reliance on oil and gas and relieve fuel poverty?

 

Tax and the fossil fuel industry

  • What impact will high prices for oil and gas have on production and the net zero transition? What are the pros and cons of a windfall tax levied on fossil energy producers? How should the revenue from any levy be allocated?
  • Should the Government continue to provide tax reliefs or financial support to the fossil fuel industry, such as the ring-fence corporate tax relief for new oil and gas fields?
  • How can Government phase out support for fossil fuels whilst most effectively supporting households through the transition?

 

The transitional role of oil and gas in the energy mix

  • Can the UK’s oil and gas reserves be exploited while limiting global temperature rises to 1.5c in line with the Paris Agreement?
  • Is carbon capture and storage technology sufficiently mature to be deployed at scale in the necessary timescale? What economic opportunities are there in carbon capture in the North Sea? What risks are there to relying on carbon capture technologies?
  • While the UK continues to use fossil fuels during the transition to net zero, how significant is the environmental or carbon benefit of exploiting domestic oil and gas reserves compared to importing fuels from other major suppliers?
  • Is the North Sea Transition Deal structured appropriately to meet net zero goals and support a ‘just transition’ for those working within the oil and gas sector in the UK? Is there sufficient independent oversight of the Deal?
  • Is the North Sea Transition Deal genuinely compatible with the UK’s current domestic carbon targets and international obligations? How rigorous is the proposed Climate Compatibility Checkpoint for new oil and gas fields?

 

It is recommended that all submitters familiarise themselves with the Guidance on giving evidence to a Select Committee of the House of Commons which outlines word count, format, document size, and content restrictions.

 

[1] ENDs report, Johnson moots short term rise in fossil fuel production to bolster energy supplies, 8 March 2022

[2] UNFCC (2021) Glasgow Climate Pact

This call for written evidence has now closed.

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